Cabo Drilling Corp. Announces 2015 Fourth Quarter and Annual Results

SELECTED ANNUAL HIGHLIGHTS

The Company reports:

• Revenue for the fourth quarter fiscal 2015 ("Q4 FY2015") of $4.01 million compared to $4.74 million in the fourth quarter fiscal 2014 ("Q4 FY2014").
• Gross margin percentage for the quarter was negative 6.0% (with depreciation included in direct costs), compared with negative 20.8% in for the corresponding period last year.
• Negative EBITDA of $678,413 for the quarter compared to negative $2.47 million in Q4 FY2014, resulting in EBITDA per share of $0.00 for the quarter compared to negative $0.03 in Q4 FY2014.
• Net after tax loss for the quarter was $4.60 million or a loss of $0.06 per share (loss of $0.06 per share diluted), compared to net after tax loss of $1.28 million or a loss of $0.06 per share (loss of $0.06 per share diluted) for the corresponding period last year.
• Cash from operations, before changes in non-cash working capital items, was negative $1.80 million for the year ending June 30, 2015 compared to $4.31 for the year ending June 30, 2014.

"The extraordinary downward slide in exploration, development and geotechnical demand for drilling services since 2012, plus the severe challenges we experienced with substantially reduced meter and hourly price rates, has reduced Cabo's gross revenue to the lowest levels that Cabo has experienced in its history. However, we expect better quarterly gross revenue, cash flow and bottom line results in 2016. We believe that the Company's quarterly revenues will improve looking forward; revenues should remain steady in the $4.0 - $4.5 million per quarter range," stated Mr. Versfelt, President and CEO of Cabo Drilling.

"Cabo Drilling generated revenues for fiscal 2015 of $14.65 million," commented Mr. Versfelt. "This represents a 36% decrease compared to the $23.01 million recorded in the comparable period in fiscal 2014. The Company's quarterly gross revenue for the three months ended June 30, 2015 also decreased by 16% to $4.08 million compared to $4.74 million in the comparable three month period in fiscal 2014."

"Gross margin, adjusted to include depreciation, was 5.8% or $859,231 in fiscal 2015, as compared to 3.6% in fiscal 2014," commented Mr. Versfelt. "In accordance with IFRS, depreciation expenses of $2.09 million are included in direct costs as compared to $2.31 million in fiscal 2014. Adjusted gross margin, when depreciation expense is excluded from direct costs, is 20.1% in fiscal 2015, as compared to 13.6% in fiscal 2014."

"General and administration costs decreased by 38% to $3.96 million when compared to the $6.39 million in fiscal 2014. The decrease is a direct result of restructuring activities that began in fiscal 2013 and continued into fiscal 2015," stated Mr. Versfelt.

"Total liabilities decreased by $922,085 during fiscal 2015 to $12.18 million at June 30, 2015," Mr. Versfelt noted. "At June 30, 2015, the Company also has $26,506,000 in tax losses, expiring primarily between 2025-2035."

Mr. Versfelt noted that "the Company has engaged financial advisors to assist in refinancing or replacing $2.705 million in debentures and a $1.4 million equipment loan, plus interest, the repayments of which were due in May, 2015. The Company is in arrears on its debenture and equipment loan interest payments. The Company is currently in second stage discussions for no less than $6.0 million in debt financing to replace the $1.4 million lender and the debenture loans. It is also exploring additional finance opportunities in Central America and Canada to continue the restructuring of the Company's debenture debt."

"The Company reports negative EBITDA of $706,308 during fiscal 2015, compared to negative $3.03 million in fiscal 2014," stated Mr. Versfelt.

"Approximately 71% of fiscal 2015 revenues came from gold related projects, 27% from copper, and the remaining 2% from other base metals," commented Mr. Versfelt.

"Our safety record is one of the best in the industry and our client relationships are very good," commented John Versfelt. "With a continued focus on excellent safety, high environmental stewardship and improved productivity, plus the improved availability of good to excellent drilling personnel, we believe we will experience better projects and better margins, with high safety standards and high quality clients, in Canada, Europe and Latin America."

Consolidated Fourth Quarter Financial Results

Revenue for the three months ending June 30, 2015 decreased approximately 16% to $4.08 million, compared to $4.74 million in the comparable period in fiscal 2014. Revenues from our international divisions for the quarter represented 23% of revenues as compared to 52% recorded in the fourth quarter of fiscal 2014. The decrease is a result of higher drill utilization in Canada during this period and decreased activity in Latin America.

Surface drilling decreased by 30% during the three month period ending June 30, 2015 to $2.87 million, due to decreased utilization in the Atlantic and Latin American divisions. Underground drilling increased 63% during the three month period ending June 30, 2015 to $1.01 million. This compares to $619,000 during the same period in fiscal 2014. The increase is due to higher drill utilization on our underground contract in Ontario.

Direct costs for the three months ended June 30, 2015 were $4.26 million compared to $5.72 million in the comparable period in fiscal 2014. Gross margins for the three months ended June 30, 2015 were negative 6.0% compared to negative 20.8% during the three months ended June 30, 2014, when direct costs include depreciation expenses or 8.8% compared to negative 10.6% for the respective periods, when direct costs are adjusted to exclude depreciation expense.

General and administrative expenses decreased by approximately 35% from $1.98 million in the three months ended June 30, 2014 to $1.29 million in the three months ending June 30, 2015. The decrease to $1.29 million includes $492,844 in bad debt allowance. The primary reason for the decrease is the decreased administration salaries, lower insurance and travel expenses. Salary costs have decreased due to terminations or not replacing employees who left the company.

Net loss for the last quarter of fiscal 2015 was $4.60 million compared to net loss of $1.28 in the comparable period of fiscal 2014.

The drilling services business is always challenging, but the challenges that the industry is experiencing today are the worst in over fifty years. We believe we are at the bottom of the worst global mining market that anyone in the mining business today has experienced. We are not expecting a dramatic turnaround in the industry for the next year, but we are budgeting for some improvement similar to 2002/2003 levels. The business conditions in 2012 - 2015 have caused cash flow challenges for drilling services companies, many of whom, including Cabo, have had to work with their lenders to obtain loan payment extensions and renegotiate terms and conditions with existing financial companies, while seeking new financing facilities. Provided that the Company can obtain financing stability, we are trusting that our demonstrated business values and a continued focus on enhanced business services and low costs, will encourage growth with new clients, as the mining markets improve. In the meantime, the Company is expanding its mining sector business into the infrastructure sector. This will, over time, include offering drill and blast, geotechnical services, tree cutting and clearing services, and other services in road building, for the general contracting sector, the pipeline sector, the hydropower sector and the oil & gas sector.

Financial Statements and Management's Discussion and Analysis are available on the Company's website (www.cabo.ca) and on SEDAR (www.sedar.com).

About Cabo Drilling Corp. (TSX VENTURE:CBE)

Cabo Drilling Corp. is a drilling services company headquartered in New Westminster, British Columbia, Canada. The Company provides mining specialty drilling services through its divisions in Kirkland Lake, Ontario, Canada, with branches in Surrey, British Columbia and Springdale, Newfoundland; as well as Cabo Drilling (America) Inc. of the United States; Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; Cabo Drilling Panama-Pacifico Corp. of Panama, Republic of Panama doing business as Cabo Drilling Colombia Corp.; Balkan States Drilling SH.P.K. of Tirana, Albania; and Cabo Drilling (International) Inc. The Company's common shares trade on the Frankfurt Exchange under the symbol: DHL and on the TSX Venture Exchange under the symbol: CBE.

ON BEHALF OF THE BOARD

John A. Versfelt, Chairman, President and CEO

Further information about the Company can be found on the Cabo website (www.cabo.ca) and SEDAR (www.sedar.com).

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements including but not limited to, those relating to worldwide demand for gold and base metals and overall commodity prices, the level of activity in the minerals and metals industry and the demand for the Company's services, the Canadian and international economic environments, the impact of operational changes, changes in jurisdictions in which the Company operates (including changes in regulation), failure by counterparties to fulfill contractual obligations, and other factors as may be set forth, as well as objectives or goals. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.